Buying a home is a huge decision. It’s the biggest investment most people make in their lives. And there are so many things to consider! As you’re considering your options, here are some questions to think about before buying a home.
What is the current real estate market like?
If you live in Colorado, then you’re probably aware that it’s a seller’s market. What does that mean?
For Buyers, it means if you find a place that you like, there are likely to be other buyers interested in the same home. You may need to move quickly to submit an offer. An experienced Realtor, like Tim and Susanna, can really help you put together an offer more likely to be accepted by the Seller.
If you’re a Seller, understand it’s the nice homes that sell quickly and for the best price. Assuming your home doesn’t need a lot of work or updates, your home is likely to sell quickly in today’s sellers market. So you need to have a plan for where and when you’ll move. We have worked with our sellers to get a Post Closing Occupancy Agreement (PCOA) with the Buyers to allow the sellers to stay in the home for 30-60 days after closing. A PCOA allows the seller to sell their home first, buy their new home, and only have to move once. BTW, if you’re a Buyer, allowing the Seller to stay in their home after closing can be a powerful negotiating advantage. Give us a call for more information and ideas.
What will my monthly payment be? What will it include?
The amount of your monthly mortgage payment will depend on multiple things:
- The amount of your loan
- The interest rate
- The term, or length, of your loan. Most loans are for 30 years.
- Property taxes
- Insurance
You may have heard the term PITI: Principal, Interest, Taxes, and Insurance. Virtually all buyers who get a mortgage will make a monthly PITI payment to their lender. The monthly Taxes and Insurance amount will be 1/12 of the yearly total. The lender escrows those funds, and the lender pays the tax bill and insurance bill from the escrowed funds.
How much will insurance cost?
If you currently rent, there will obviously be a difference between renter’s insurance and Homeowner’s insurance. If you currently own a condo and you’re looking to buy a single-family home, there’s likely going to be an increase in your homeowner’s insurance. It’s best to know what the difference will be ahead of time, or at least get an estimate, so you can calculate that into your new budget.
If you are putting less than 20% down, you may also have mortgage insurance included in your monthly payment. You need to understand how much this will cost every month, and for how long. Some mortgage insurance can be eliminated once you have sufficient equity in your home, but other types of mortgage insurance require payments for the entire length of the loan.
How much will utilities cost?
Your monthly utility bills are likely to change if you’re going from renting to buying or if you’re increasing your home type. Things such as water and garbage might currently be included in your rent or homeowner’s association, but will be your responsibility with the new home.
Will my commute be better or worse?
You definitely want to take a look at your new route to work to get a sense for how your commute will be affected. Additionally, if your commute is longer, you’ll want to factor in the additional cost of gas. This may not be a huge deal, but everything adds up.
Does the school system meet our requirements?
If you have children then you definitely want to check into the local public schools. Don’t have kids? This is still something you should take a look at as it will affect the resale opportunity.
What maintenance will my home require (in the next 5 years)?
This can be a big one! Yes, you definitely should have an inspection prior to buying a home (even a brand new house) so you’ll be aware of anything the inspector points out. But what about the stuff the inspector can’t see? There are all sorts of things that happen with a house that you should be prepared for. If you’re buying in a mature neighborhood with big trees on the lot, consider how old the house is and ask if the sewer line has been replaced, and if so, how long ago. We strongly advise getting a sewer inspection before purchasing a home. Other big ticket items are windows, roofs, water heaters, furnace and air conditioner.
Be Prudent, not Scared! You Can Do This!
It’s both exciting and challenging buying a new home! We hope you now feel a bit better prepared for buying a new home. Most people buy a home even less frequently than they buy a car, so they have very little experience or even awareness of the many potential issues. It’s really wise to get the help, experience, and advice of someone who buys and sells homes for a living. As experienced Realtors and real estate investors, Tim and Susanna have deep experience helping people buy and sell homes. That experience can be invaluable helping you purchase your home! They can help you avoid problems not only with the purchase, but down the road. We’d love to answer any questions you may have and partner with you on this exciting process! Give us a call!